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June 2017

06/16/2017

Most of us look forward to a retirement filled with leisure and relaxation, but many older Americans are facing financial difficulties that are destroying their retirement dreams. One article addressed some of seniors’ biggest financial challenges and what they can do to fight back. What follows is a summary of the article.

Historically Low Interest Rates

For almost a decade, the Federal Reserve has kept the federal funds rate at a record low. This might be good if you are refinancing debt, but it is disastrous for those who stay in fixed-income investments such as certificates of deposit, money market accounts, savings accounts and bonds—all long-time favorites of seniors who are more risk-averse than other investors.

Low Trust in the Stock Market

The recession provided an opportunity for long-term investors to snap up stocks at attractive lower prices. But for many seniors, it was a reminder of the volatile nature of the stock market which is contrary to their more conservative investing approach. Many of them stayed in their low-yielding fixed-income investments and lost out on the subsequent gains of the rebounding market.

Fight back: Be willing to invest a portion of your investments in the stock market. It’s one of the few places you can invest your money that, over the long term, will outperform inflation. And with people living longer today, your savings will need to last longer than before.

Rising Health Care Costs

Medicare doesn’t cover all medical costs, and out-of-pocket expenses can be substantial. One survey found that 20% of seniors did not see their doctor because of the out-of-pocket costs. Also, the costs of drugs, diagnostics and medical devices continue to rise.

Fight back: Use some of your savings, investment income or work income to purchase supplemental health insurance that will help cover medical expenses not covered by Medicare.

Social Security Issues

According to the Social Security Administration, more than half of all couples rely on Social Security for at least 50% of their retirement income, and almost half of unmarried seniors rely on it for at least 90% of their retirement income. But the cash reserves that supply this income are in trouble and, unless Congress addresses the problem soon, they could run out by 2033.

Unfavorable Job Market

Going back to work is an option for many seniors who have little retirement income or rely heavily on Social Security income. Yet it takes older workers longer to find employment and they are often competing with younger workers who are willing to accept lower wages.

Fight back: Working longer at your current job may be a viable option. You may also be able to find paying work in a hobby or avocation. You may even be able to start a small business to supplement your income.

Debt…and Feeling Obligated to Help Adult Kids

Fully 45% of all homeowners over the age of 62 still have a mortgage payment. Many have credit card and other consumer debt. Of those age 60 and over, who are no longer working, 43% admitted to helping their adult children pay their bills. Many seniors have student loan debt for themselves, their children and dependents going to college.

Fight back: Learn to say “no,” especially if your retirement funds are limited. This is your retirement, and your children and grandchildren need to respect that. If you are earning extra income, use some of it to pay off your debt.

06/14/2017

Estate planning is often something we leave until it’s far too late. For some, it’s about the pain associated with thinking about leaving this world. For others, it’s just one more thing on the never-ending to-do list. In their haste to get that one thing out of the way, costly mistakes are made. In estate-planning terms, this can mean a long and expensive probate process, significant tax consequences for your heirs and hurt feelings when your loved ones don’t get the assets that they were hoping to inherit.

As estate-planning attorneys, we see many mistakes and their aftermath. Here are just a few of the most costly mistakes made by people who thought they could DIY their estate planning.

Letting the State Court Decide. While it is true that each state has its own laws surrounding intestate succession (distribution of assets of people who die without a will), that distribution may not happen the way you would want it to happen. For example, if you die without a valid will in place, your assets may be distributed equally to your son and daughter. It could be that your son has been taking care of you for years and your daughter wrote you off years ago. You may not want her to receive any of your assets, because you want to reward your son’s loyalty. If the state distributes your assets because you don’t have a valid will in place, your wishes may not be granted. Your estate will also have to go through a very costly and public probate process.

Not Transferring Assets into Your Trust. Some people are under the mistaken impression that they can create a trust online and then they are done. Unfortunately, a trust is irrelevant if you do not transfer assets into the trust, what’s known as the “trust res.” Without transferring expensive assets like houses, art and other luxury items, your trust is useless and the assets must go through probate, thus diminishing the size of your legacy.

Leaving Assets Directly to a Loved One with Special Needs. Leaving assets directly to a person with special needs may result in them becoming disqualified for important government benefits. This could jeopardize their housing and health care over the long-term. If you have a loved one with special needs, there are ways to provide for them without leaving them assets directly. Talk to an estate-planning attorney about special needs trusts.

Choosing the Wrong Trustee. When you create a trust, you must assign a trustee to manage the trust res. If you choose someone who is interested in the assets of the trust, such as an adult child, it may lead to infighting among your other children. Alternatively, choosing someone with no business acumen or questionable ethics may lead to the trust res being depleted and your legacy wasted.

Failing to Update Beneficiaries. Most banking and financial accounts, life insurance policies and investment accounts require you to name one or more beneficiaries to inherit the assets of the account, once you pass. These beneficiary designations should be reviewed and updated annually, or whenever a significant life event occurs. Failure to do so can result in your assets going to a hated ex-spouse, instead of someone you would have wanted the asset to go to.

Avoid the DIY mistakes and talk to an experienced estate-planning attorney in your area today.

06/13/2017

Senior citizens are some of the most vulnerable people in our country today, due to scams that are targeted to steal away their hard-earned assets. Many scams attempt to exploit widows who may not have the same financial savvy as younger generations of women. For many seniors, it’s their trusting nature that allows them to become ensnared in a scammer’s trap. When they do fall for these schemes, seniors may end up losing all of their savings and other assets, with no hope of seeing them again.

Despite this growing trend, there are things that we can all do to help protect our elderly population.

Understand the Latest Scams

Having up-to-date knowledge about what scams are popular can help us to protect our elderly loved ones. Here’s a brief run-down of what scammers are up to right now:

Medicare Fraud – elderly person receives phone call, and even a personal visit from someone informing them that they need a new Medicare card or a supplemental policy, or offering assistance in navigating the new health care laws. Seniors unwittingly provide social security numbers and other personal information.

Funeral Scams – scammers will often read obituaries and attend the funerals of people in an attempt to gain the trust of a grieving friend or relative. The scammer then tells them that the deceased owed them a debt and tries to get the friend or relative to pay it.

Phone Scams – unscrupulous people will call senior citizens posing as the IRS or other government entity and demand immediate payment of a bogus debt. Seniors are intimidated until they pay the fees.

Internet Scams – fake computer security engineers call up seniors to warn them about security threats to their computers and offering them assistance. The criminal gains remote access to the senior’s computer and steals personal and financial information.

Reverse Mortgage Cons – this is a common scam where seniors are offered the peace of mind of staying in their homes without the burden of paying the mortgage. Often, the scammers charge a fee for their services and the senior citizen ends up losing their home.

The Grandparent Scam – another recent addition to the scammer’s toolbox, a person calls an elderly individual pretending to be the elderly person’s grandchild. They convince the elderly person that they are in trouble and need them to wire money immediately to help.

Keep In Contact

When you have elderly relatives, it is important to keep in contact with them and stay involved with their lives on a frequent basis. If you can, talk with them about these types of scams and offer to help them determine if a new contact may be a scammer in sheep’s clothing.

Come Up With a Scam Game-Plan

When talking with your elderly relative about possible scams, give them some tools to help them deal with them, such as:

reminding them that government agencies do not call people asking for money

imploring them not to give out personal or financial information over the phone

asking them to review any contracts or bills that are presented to them

empowering them to hang up the phone or close the door, if they start to feel like something is not quite right

Our elderly loved ones are some of the most precious people in our lives. Help protect them from fraud by staying in contact and helping them avoid losing their assets.

06/12/2017

If you were to become incapacitated tomorrow, would your family know how you would want to be treated? For too many people, that answer is “no.” Most people have an aversion to thinking about their mortality. This is understandable. But what about your loved ones? Leaving them to argue over important medical decisions, while they are worried about your health, can be just as painful for them, if not more.

What is an Advance Directive?

Having an Advance Directive in place can prevent additional family stress in the event that you become incapacitated. It is also known as a Health Care Power of Attorney. The living will contained in the Advance Directive is a relatively simple legal document that discusses your wishes for treatment, in the event that you are unable to speak for yourself. It addresses questions like:

Do you want to be resuscitated if you are no longer breathing?

Do you want to be placed on a respirator if you can no longer breathe by yourself?

In what cases would you decline a feeding tube?

How long would you want to be kept alive artificially?

Depending on the current state of your health, these questions may be answered differently. The great thing about an Advance Directive is that you can revise it throughout your lifetime to reflect your feelings and health situation at the time. This is also a good place to record your current primary care physician and whether you would like to donate your organs.

Assigning an Agent

In addition to setting down your medical treatment wishes, an Advance Directive enables you to assign a proxy to make medical decisions for you when you can’t make them for yourself. This person should be strong in emotionally challenging situations and should be able to make difficult decisions based on a thorough understanding of your wishes for medical treatment. This agent can be any competent person over the age of 18.

Who Needs an Advance Directive?

Anyone who is over the age of 19, should have an Advance Directive on file with their other important paperwork. If you have strong feelings about artificial life support, dying with dignity or other medical care considerations, you should set these down in writing and talk about them with people you love. Not only will you ensure that your wishes are heeded, you will also take the burden off of your loved ones to make these decisions for you.

How Do I Get an Advance Directive?

There are a number of ways to obtain an Advance Directive form. You will want to ensure that the form you have, or the one you write, satisfies the laws of the state in which you live. Your primary care physician may have forms for living wills on file that they provide to their patients as a courtesy. You can also find them on the internet. However, the best way to ensure that your living will is legally sound is to talk with an estate-planning attorney in your area. This is a relatively inexpensive way to show your family that you care enough about them to relieve them of the burden of making critical medical treatment decisions in a time of crisis.

06/09/2017

US citizens become eligible for Medicare when they turn 65. If you are months away from your 65th birthday, it’s best to get started on your Medicare application. Here’s what you should know about Medicare:

Part C is offered by medical insurance companies that contract with Medicare to provide all Part A and Part B benefits in a single plan, in addition to extra services such as dental and vision care. Sometimes, it may even cover prescription medication.

Part D covers prescription medication.

When Does Enrollment Begin?

Enrollment for Medicare begins as you approach your 65th birthday. It lasts seven months split into three months before the month of your birthday and three months afterward. For example, if you are to turn 65 on 1 January 2018, enrollment begins on 1 October 2017 and ends on 30 April 2018.

How Do I Enroll in Medicare?

If you already receive Social Security benefits or Railroad Retirement pay, you do not need to enroll in Medicare since it happens automatically (for Part A and B) on the first day of the month of your 65th birthday. You should receive your Medicare card in the mail, three months prior to your birthday.

If you are approaching 65 and you are not getting social security or railroad retirement pay, you should enroll in Medicare. You can do this by either calling Social Security at 800-772-1213 or by visiting a local Social Security office.

If you are actively employed and your employer offers health insurance coverage (COBRA coverage and VA benefits do not count), you may not have to apply for Part B coverage immediately. You may want to consult with an elder law attorney to determine if it would be reasonable to delay enrollment in the coverage.

Payments for Part B Medicare

Every person pays for Part B Medicare insurance. The funds are usually deducted from your Social Security payments.

Premiums are calculated every year. The 2017 standard premium was $134. However, many people pay less after cost-of-living adjustments. Premiums may be higher for people with high incomes and for people who did not enroll when they were eligible to do so.

Medicare Part C Coverage

Insurance companies contract with Medicare to provide seniors with Part A and B coverage in a single plan. These plans are also called Medicare Advantage plans. These plans may also cover medication and dental, vision and wellness care.

Medicare Part D

If you do not have Part C cover that’s inclusive of medication, you should enroll for Part A, B and D coverage. When you delay enrollment in Part D, you risk paying 1 percent higher premiums for every month you were eligible to enroll but delayed.

What is a Medigap policy?

Because of its numerous deductibles, coverage exclusions, and copayments, Medicare often only pays for 50 percent of all seniors’ medical costs. The balance can be settled by private insurers offering Medigap policies to cover the gaps not covered by Medicare. You can check local insurers to see if they offer a Medigap policy.